The derivatives and other exotic instruments

[moniss]

6. Yes the Fed repo action has been off the charts for a long time now

and it's like trying to pour enough water into a bucket with holes to keep it at a certain level while more and more holes get punched in the bottom. The moves in bonds are also making it more and more difficult to maintain desired balance and control and the Fed ends up in the position of needing huge amounts more but the debt ceiling is here and the more you run the printing press now will impact the devaluing of the dollar. So it ends up like a dog chasing it's tail.

You can't push cuts in interest rates, as Crumb the 1st is doing, as a solution because it only increases the pressure for more dollars in light of a devaluing dollar. That's one reason why in a floating currency valuation environment you see countries make the mistake of pumping currency into the system to make up for falling valuation and then the only way to "dry things up" and strengthen the currency again is to have huge interest rates.